Thursday, March 10, 2011

My immediate upside target is 37.300, but if the futures settle above it for two consecutive days, look for the rally to continue to at least 39.620. Night owls will not have much to shoot for, since Wednesday's action was just dueling impulse legs. Bulls hold a slight edge at the moment (10:30 p.m. EST),  but they'll pick up some steam if they can push above a midpoint resistance at 36.080 that can be found on the five-minute chart (A=35.820, B-36.270 and C=35.855). _______ UPDATE (10:29 a.m. EST):  Today's plunge seems likely to continue to at least 34.365, a Hidden Pivot support that can be found on the 30-minute chart (A=36.190, B=35.085, and C=35.470). If that number is breached by more than three ticks, however, expect the futures to test structural support near 34.

The gratuitous molehill traced out by yesterday's price action did nothing to alter a 1459.40 target that currently serves as our minimum upside objective for the short term. A modest thrust today exceeding 1434.80 would get the futures off the launching pad, but they need only close above 1431.40, the midpoint resistance of the pattern shown, to imply they're on their way to its 'D' sibling,  at least, 1438.20.  Alternatively, if there's follow-through to yesterday's weakness, try to buy 1421.50 with a six-tick stop. _______ UPDATE (10:24 a.m. EST):  Precious metals have come down hard today with the stock market.  Gold's so far low at 1410.70 is in a stupidly obvious place, a tick from a key intraday low made a week ago.  When it breaks through, expect the selling to continue to at least 1406.30.  Because this morning's low is actually a tick below the March 3 low, the move is bearish impulsive, possibly opening the door to a camouflage short.

The Dow has a clear rally target at 12572, although the lengthy sideways movement since mid-February suggests bulls are not in great shape to take their epic hoax to a new level. Hoax or not, we can continue to look for a breakout, and to play it with relatively little risk, by focusing on impulse legs that develop on charts of 15-minute-degree or less. Alternatively, if the Indoos drop dead, reconciling themselves with natural law, look for the first air pocket to hit 11876.  _______ UPDATE (3:20 p.m. EST):  With the Indoos off as much as 240 points so far today, it's become pretty obvious which  of the two targets is going to get hit.

We went bottom-fishing in the E-Mini S&P at a delicate target, only to get stopped out for small change. This is telegraphing more weakness on Thursday, since it was the lowest target I could have projected using the five-minute chart.

The 1312.75 target disseminated here and in the chat room yesterday morning caught a fleeting low and a whoopee cushion bounce, but the action was too violent for a timer to get much of a ride. Since all downtrending patterns seem to be "maxing out," I'll recommend bottom-fishing at 1309.25, the lowest correction target that can be inferred from the five-minute chart (see inset).  A two-tick (!) stop-loss would be appropriate._______ UPDATE (1:24 pa.m. EST): The trade was stopped out for a loss of two or perhaps three ticks ($25 or $37.50) hinting of underlying weakness yet to play out.  Adding to a bearish picture is that the futures have found support in a too-obvious place:  Tuesday's structural low at 1306.00.

Don’t expect all hell to break loose in Saudi Arabia when demonstrators hit the streets today in a planned show of strength. Protests are likely to be subdued, according to a Rick’s Picks subscriber who lives there.  “You need to take what the news and Internet are saying with a grain of salt,” he wrote. “I am currently living in Saudi and have been talking to the locals the past few weeks. Everybody I have talked to does not believe anything will happen this weekend, nor do they want change. I am not saying nothing is going to happen, but that is the ground report. Everybody I have talked to, regardless of which Muslim religion they practice, loves the king and is grateful for what has occurred in thecountry over the past generation. You need to remember that these people were 98% nomads less than 30 years ago.”  The “experts” would indeed have us braced for the worst. “Although most political analysts predict any demonstrations to be swiftly – and perhaps bloodily – suppressed by the government,” the Financial Times reported, “any hint that the protests enjoy wider-than-expected support is likely to spook investors once again.” We suspect that even if Riyadh remains relatively peaceful, however, that crude oil prices will continue to head higher.  A short while back, we wrote here that the spike in crude caused by mounting troubles in Egypt and Libya would seem relatively tame in comparison to what we might see if Saudi oil production were to come under threat. While we still think that’s true, we now expect a quiet weekend in Saudi Arabia to ultimately have little impact on energy markets that seem likely to remain in the grip of speculators. They are quite obviously determined to keep squeezing until the fever breaks,